The Indian stock market witnessed a sharp sell-off on Friday, with the benchmark Sensex plunging 1,414 points (1.90%) to close at 73,198, while the Nifty50 dropped 420 points (1.86%), slipping below the 22,150 mark. This bloodbath wiped out a massive Rs 9.61 lakh crore in market capitalisation, bringing the total valuation of BSE-listed firms down to Rs 383.49 lakh crore.

The sell-off is part of a broader market downturn, with the Sensex losing 14.7% (12,638 points) and the Nifty tumbling 15.6% (4,092 points) since their record highs on September 26, 2024. Overall, investors have seen a staggering 18% of their wealth eroded in just a few months.

Why Are Markets Crashing? Key Factors Behind the Sell-Off

The latest market meltdown can be attributed to a mix of domestic and global pressures, leaving investors scrambling for stability.

• Jitters Over GDP Data: With the December quarter GDP numbers set for release, anxiety is running high. A potential slowdown in economic growth and faltering corporate earnings have dampened investor sentiment.
• Trade War Fears Resurface: Former U.S. President Donald Trump’s decision to impose fresh tariffs on imports from Canada, Mexico, and China has sent shockwaves across global markets, further fuelling uncertainty.
• Tech Stocks Take a Beating: The Indian IT sector followed Wall Street’s lead, with the Nifty IT index plunging after chip giant Nvidia saw a steep decline overnight.
• Strong Dollar, Weak Emerging Markets: The U.S. dollar index climbed to 107.35, making foreign investments more expensive and prompting capital outflows from emerging economies like India.
• Relentless FII Sell-Off: Foreign Institutional Investors (FIIs) have offloaded Rs 1,13,721 crore worth of Indian stocks this year, adding to the downward pressure.